16 October 2008

Changing times!

by Sumita Kale
The times.. they are a changing…breaking news that the US surrenders power to appoint World Bank President. It would be interesting to get readers’ opinions on why this change is happening at this particular point in time. One angle comes from an article written last year, Who rules the World Bank ,that gave the link between Wall Street and the rationale for US control: ‘Selection of the Bank’s President is based on an unwritten “gentlemen's agreement” reached when the Bank and Fund were created at the 1944 Bretton Woods conference: the US chooses the head of the World Bank while western European countries name the head of the IMF. “This prerogative was initially granted not only because the United States was the Bank’s largest shareholder but also because it was the key guarantor and principal capital market for Bank bonds,” Catherine Gwin notes. US control, it was reasoned, would instill confidence on Wall Street to invest in Bank securities – a principal source of Bank funds. However, capital markets have long since gone global and the Bank has diversified its portfolio. The Wall Street rationale for US control of the Bank’s top seat no longer exists.’ With the turbulence in the financial markets and talk of the end of the American Empire, the events at the World Bank are significant....could this be a sign of the changing power equation in the world? Or does it just signify the end of relevance of the World Bank?
Readers’ comments welcome!!